the interview: Bette Chen
Bette Chen is co-founder of Laminar & Acala. Acala is the cross-chain decentralized financial hub and stablecoin platform of Polkadot that makes it fast and easy to use or build financial applications, improving trading efficiency and saving time. The platform offers a suite of financial primitives while Ethereum compatibility makes Acala the landing pad for Ethereum DApps to access Polkadot’s multichain ecosystem and aggregated cross-chain liquidity.
*For those unfamiliar with crypto, this glossary may be useful.
I’m sure we could talk about crypto for hours but let’s start with the story of what initially sparked your interest?
I got into crypto out of personal passion. I heard about Bitcoin a very long time ago, but I didn’t quite understand it because I had only heard about it from a third-party. A few years after that, I read the white paper and that was the trigger of going down the rabbit hole. Once I read the white paper, I started reading almost every single book, starting with Mastering Bitcoin. That was the point at which I started getting my first Bitcoin and trying to see how I could get involved in one way or another. It took a few years until I got involved professionally. It was a blast that I was able to make that career transition into blockchain and start becoming a builder.
When you start, maybe you hold a little bit of Bitcoin, but you’re mostly a spectator, right? Then, you decide to be part of it, and you can feel that it’s a movement. You can feel the passion and the people behind this technology.
I totally related to the financial motivations and also democratizing information and giving the power back to the people. I’ve been exposed to East Asian culture as well as Western culture. I have friends and family all over the world. Across these countries, there are very significant discrepancies in terms of what’s under your control, what information is yours, what wealth is actually yours. There is a huge discrepancy and I saw individual struggles as a result. I could see how this technology could change the way society operates. The best way to predict the future is to be part of it, to start building stuff. That’s why I made the career jump into blockchain and became a builder.
That’s really awesome, and I think there are a lot of people considering making that jump right now, so it’s great to hear about your journey. How have you seen the ecosystem develop over time?
I started out as a product manager in blockchain, that was almost a dream transition for me into the crypto space. When I started, I was still mostly an engineer. Getting involved as a product manager, I was able to help shape token economics and many products. At a platform level, there was a point where I was also doing a lot of research to figure out the best tech stack and how to build something commercially viable and more geared towards users. We tried to figure out if there was a platform that wouldn’t require us, as application builders, to focus so much on the low level P2P processing or consensus algorithm. That’s pretty hardcore and requires a lot of specialization and expertise. Our passion is really about delivering products and applications that everyday users can engage with, so they can really see the benefits of the blockchain. Back then, the technology was still pretty raw, it was a long way from actually delivering that type of experience. In this search, we encountered Substrate, which subsequently led to my current startups at Laminar and Acala. Back then, the ETH 2.0 roadmap was available, there was also the Cosmos SDK, and a few others options. At the very beginning, it was ultimately a technical decision that we made. Substrate seemed more feasible and usable for our purposes. That led us down another rabbit hole and we probably ended up dedicating our whole career into the Polkadot ecosystem.
Right. You’re obviously very committed to the Polkadot ecosystem, but how do you think about the interplay between different Layer 1 solutions?
The knowledge of Bitcoin is about a very specific application, doing value transfers. It’s a little bit like calculators. They can do specific calculations, you can program them, but it’s very limited. Bitcoin is basically just a ledger. Then the industry evolved and we had Ethereum, which is a ledger plus an EVM (Ethereum Virtual Machine.) If you look at it from an engineering perspective, the EVM basically makes it a computer. Now, you can program and write applications, but it’s more like a mainframe computer. All of a sudden, you can open Pandora’s box. You can build many different composable DeFi (decentralized finance) applications: lending, borrowing, yield farming, etc. At the same time, the new yield farming craze resulted in the cost of gas (transaction fees) skyrocketing. For builders and users, the marginal benefits decrease as the cost goes up. So the umbrella of innovations opened everybody’s mind to what was possible, but we also recognized that it’s still a mainframe, right?
You’ve touched on this a little bit already, but what inspired you to build on Polkadot?
When you think about how computing moves beyond the mainframe, you need client-server, cloud computing, SaaS models, cool apps. I think that composability, which enables resource sharing, is very important. We’re at the stage now where you want blockchain-as-a-service, trust-as-a-service, and then you can compose specific applications on top of that. This is where we have huge conviction on how Polkadot structures this ecosystem. Layer 1s, or mainframes, don’t talk to other mainframes very well. We view Polkadot as a sort of Layer 0, an internet protocol that provides communication across the different chains. Those communications are meaningful because Polkadot provides meaningful, cross-chain communication, powered by trust-as-a-service. So every chain that connects to Polkadot can share security. Polkadot is a proof-of-stake network with something like $30B in market cap. As entrepreneurs, we were very convinced by this business model. The low level tech is hard, so having an out-of-the-box framework that enables us to focus more on the application, and not have to worry so much about the lower level tech, is a huge benefit that Substrate provides.
The other thing is that builders are naturally attracted to builders. We look at other people’s source code. We do code dating when we collaborate with other teams. We write some code together and see how we gel. Look at Gavin Wood and the Parity team. This is who they are. They are builders, they are coders.
I went to a hackathon in China and Gavin Wood was there. After Gavin gave a presentation on the stage, he opened his computer while his colleagues were giving a talk. A few minutes later, he submitted a pull request, right after his talk. How many founders or CEOs out there, for any size startup, still do that? I think that’s the true spirit, building all the time. That’s what inspires us. We are doing that ourselves, and hopefully we can inspire more builders to do the same.
Finally, there is bootstrapping the network. I think in the 2017/2018 ICO craze, there were so many projects that promised to deliver different types of blockchains, or mainframes, and raised huge amounts of money to do that. How many of them actually launched? Bootstrapping a network is very hard. Bootstrapping trust is even harder. In Polkadot’s model, we don’t have to do that. You get the ~$30B market cap level of network security from Polkadot. For a DeFi-focused application chain, that’s probably one of the most important things that we considered.
Speaking of DeFi-focused applications, what did you learn from building Laminar, a synthetic asset & margin trading chain for the Polkadot Network?
A lot. Our highest goal has always been democratizing finance, making the financial products or money more accessible to everyone. That has never changed. Whether it’s Laminar or Acala, we are achieving the same ultimate goal. In terms of the path, we have to be flexible. Laminar has a very interesting journey. We had an idea of how this whole thing would need to be built out, we had traditional finance investors, everything was very clear. We deployed our first proof of concept and it worked our pretty well on the testnets. However, it was also the time when yield farming was skyrocketing. That kind of changed the plan. We had planned to deploy on Ethereum and Substrate/Polkadot at the same time. However, the craze made us more convinced that we should focus our attention on a scalable solution from the beginning, even though it probably takes slightly longer to grow because it’s the best bet for the future.
That makes a lot of sense. I’d love to know the genesis story behind Acala?
Yeah, that’s a good question. There is a story. While we were building Laminar on Polkadot, we needed a stablecoin as the base to mint synthetic assets. In order to do that on Polkadot, the critical pathway is a stablecoin. We were early, our team was one of the first builders in the ecosystem, and we were honestly waiting for someone else to build it. We considered building one, but we didn’t think it could be something proprietary, a stablecoin in a cross-chain situation needs to be community powered. It needs to be accepted by all the chains connected to Polkadot. We didn’t think it was the right thing to do to build it ourselves as a proprietary product. Then, we met this other early Polkadot builder, Fuyao Jiang of polkawallet, and we shared the same vision. We got introduced and decided to do some code dating. We opened up a GitHub repo and coded for a month or two. That’s when we realized we are both serious builders and highly aligned in terms of value and vision. We wanted to make the relationship a bit more formal and that’s when we founded Acala.
The code dating process is so smart. As a builder and founder, what advice would you give to founders and operators in our community, especially those building in crypto?
We started at a low point in the market. We started building just after the crash. Looking back, I think it’s a blessing. If you’re building right now, in the hype, in the bull market, it’s very hard to stay focused, to stay true to your vision. There are so many distractions and so many people throwing money at you. We must always remind ourselves of what we are trying to build. There’s a fine line regarding ethics and morals. We must take all the resources they throw at us and deploy them responsibly. It doesn’t matter how easily you can get funding. If you had interviewed me three years ago, I probably would have given advice on how to get funding, whose money you should take, who you want to be in bed with.
Now, there are so many opportunities that you don’t want to miss out on, there’s so much FOMO out there, it’s hard to focus on what matters. But every decision you make will have an impact on who you’re going to be. Make conscious decisions about who you want to partner with.
When we did our fundraising, it was right at the get-go of COVID. A dip in a dip. Still, we were oversubscribed because we had a product. When we did investor chats, we just demo’d the product. We showcased how to walk through the DeFi hub and use it. That saved a lot of time writing fancy powerpoints. At the same time, we’ve consciously diversified our backers. There’s many of them and they all have very different backgrounds, strengths, and expertise. Community is important as well. I think right now, in DeFi especially, there’s a tension between the VCs and the community. If you look deeper, they are not in conflict. They will help at different stages and also have a different risk profile. A project can have both. It will be beneficial to the larger community all together. I don’t think we need to be extreme and divisive. It should be a bit more cohesive and collaborative environment, for all of us.
We’ve only touched on a small portion of the things you’ve accomplished, what accomplishment would you say you’re most proud of?
I wouldn’t say that I’ve accomplished anything yet. I can honestly say that I’ve just gotten started. I think the hardest thing is choosing this path. You jump into a new industry, which is promising, but it could also be a bubble, right? It’s a bit like the Internet age, where it took quite a bit of courage to go all in. I’m quite glad that I did that though. In terms of accomplishment, I’ll probably wait until we launch and start delivering those products into everybody’s hands. I would say that’s maybe when we can start counting accomplishments. I think anyone who hasn’t done that yet, hasn’t gotten to that stage yet will probably have to still stay humble and hungry. They still have to achieve that goal of delivering real products to real people.